More than 60% of CVC units survive beyond their initial 3 years. Those that close do so for a variety of reasons — here's a look at five that ceased operations this year.
Corporate venturing units are surviving longer these days and more than 60% of those we track have survived beyond the “startup phase” of three years. Nevertheless, every year, a few CVC teams will be shut down.
There are a variety of reasons for a closure. The most common is that the parent company runs into difficulties and makes cutbacks to the CVC unit as part of an overall corporate restructuring. This was the case, for example, for Anglo American’s Decarbonisation Ventures, which appears to have been the casualty of the mining group’s struggles. Verizon Ventures, similarly, closed following a long period of well-documented struggles at the parent company and a restructuring of operations.
Other closures, such as that of SAP.io, the accelerator and investment arm of software company SAP, are more mystifying. Both parent company and CVC unit seemed to be performing well outwardly, so we can only assume some internal politics were at play. In such cases, it can often come down to connection and communication problems between the CVC unit and parent company. Even if the startups in the portfolio are showing amazing growth, if there is no sense of how this benefits the parent company’s business, the CVC activities can start to feel irrelevant.
A look at five of the CVC closures from the past year shows the variety of ways in which CVC units are closed.
Emasa Ventures
Emasa, a Chilean car parts company, closed its $20m CVC unit Emasa Ventures in March as part of a wider restructuring process which also led to the departure of general manager Víctor Ide Benner.
The CVC unit had been set up in 2021 to help the company in its strategic pivot towards electric vehicles (EV) by targeting EV, connected mobility and digital vehicular platforms. Emasa had aimed to generate 30% of its revenue from zero-emission sources by 2030, but this apparently has proved challenging.
There are echoes in the difficulties faced by European companies such as Volkswagen, which has also found the shift to EV difficult. Northvolt, a Swedish battery maker that VW has invested heavily in, filed for bankruptcy in November. The European and Latin American EV markets are both suffering from increased competition from China, which is making more sophisticated EVs sold at lower prices.
Ironically, Emasa Ventures’s sole investment was not in an EV company but an insurtech and connected mobility company, Jooycar. The Chilean startup provides coverage based on detailed data collection from the policy holder’s vehicle. It aims to encourage improvements in driving habits, increasing fuel efficiency and safety.
Anglo American – Decarbonisation Ventures
Anglo American has had a tough year. At the end of 2023 the UK-headquartered multinational mining company’s share price took a dip, partly due to poor forecasts. After that it had to contend with a takeover attempt from Australian rival BHP. Although it successfully fought it off, management initiated a stringent restructuring programme to bring costs down, reducing operations. By November of this year, it had begun to sell off its platinum business and the remainder of its coal portfolio, the latter going to US energy company Peabody Energy.
Anglo American’s Decarbonisation Ventures CVC team was among the casualties. The team was disbanded in October with no public announcement by the company. The investments – which remain on the balance sheet – were transferred to Anglo’s iron ore commodity marketing team where it is understood that they will receive less active management.
The investments include stakes in Marathon Fusion, a US company developing fuel processing technology for nuclear fusion, and Applied Carbon, a US biochar producer.
Anglo American have acknowledged that the raw materials they provide generate a high level of scope 3 emissions, those which are generated by industries such as steelmaking. Decarbonisation Ventures had been looking to invest in cleantech startups that could ameliorate the situation. The closure of the unit will mean one less investor in sustainability.
Verizon Ventures
The US telecoms group Verizon closed its CVC unit around the end of last year after more than two decades. Its portfolio is still being overseen by three managers remaining at the unit, but its main leadership has left and no new investments will be made by the fund.
Verizon Ventures was established in 2000 and its portfolio consists of 42 companies, including Optibus, which made a transportation management platform, and Pivotal Commware, a communications equipment startup.
Verizon did not comment on the reason for closing the ventures unit when contacted by GCV. However, the closure appears to have followed a cost-cutting drive earlier in 2023 after falling profits were reported in the year prior. Fortune reported that this coincided with a reshuffling of management at Verizon Ventures. Similarly, in March, the CVC closed its Israel operations, citing a desire to focus on the US market.
SAP.iO
SAP.iO was the CVC unit of the German enterprise software company SAP. It ran for seven years, was responsible for around 70 exits and five companies that reached a $1bn valuation. Then it all came to an end in March 2024.
SAP did not publicly state why the unit closed, and the decision was made in spite of a generally impressive performance. In 2023, the business analytics company CB Insights ranked Sap.iO as the sixth best startup accelerator, based on metrics including portfolio quality. It was the first out of those with corporate backing.
The fund targeted tech startups with enterprise software applications, including some experimental AI technologies. Its portfolio companies included Jina AI, a German company using speech recognition and language processing AI to make a search platform. It also invested in Manta, a US data lineage platform provider, which means tracing data through its entire flow through a company so it is easier to categorise, understand and draw insights from.
ZX Ventures
The closure of ZX Ventures, the CVC arm of the Belgium-headquartered alcoholic beverage multinational AB InBev, is another one that is hard to trace to parent company struggles.
The drinks company, which is responsible for well-known brands such as Budweiser, Beck’s and Stella Artois, has seen a relatively robust performance over the past few years, despite some decline in the consumption of its beer brands.
The CVC unit was launched in 2015 and invested in consumer startups across food and drink, including Rappi, an online delivery service, and Super Coffee, a coffee brand.
Since February 2023, the unit has not made any further investments. GCV understands that all but one of the members of the investment team, which used to be a team of six, left in 2022 and 2023.
The portfolio may be in the process of being gradually sold off. Last summer the drinks trade press reported that AB InBev had sold Atom Group, a company that runs various drinks brands, back to its original founder in August. ZX Ventures acquired the group in 2018. Atom Group founder Justin Petszaft was reported as saying that the startup had been just too early in its life cycle to fit within a large organisation such as AB InBev.
